King Coal's Return: Wealth and Worry

The U.S. has had one great piece of luck on energy. Hundreds of millions of years ago, the land was swampy and covered with plants. As they died, they fell under water, where there was not enough oxygen for them to decay completely. With geological change over the eons, these plants were tightly compacted, then compressed. The result became an almost mythical abundance of coal.

It provided the cheap energy that powered America's growth. The coal flowed in a steady black stream from the deep mines of Appalachia to fire the boilers of industry, drive the pistons of trains and heat homes. But it was a difficult fuel: bulky, grimy and dirty. Whole cities lay under a pall of acrid smoke. So oil, when it became plentiful, easily replaced King Coal.

Now U.S. oil production is declining, proven gas reserves are dwindling, and nuclear power faces an uncertain future. Only coal seems secure, because the nation's prodigious reserves--one-third of the world's known deposits --have hardly been tapped. Even at today's prices and with today's mining methods, 437 billion tons of the fuel can be easily recovered in states from Texas to Alaska, from Pennsylvania to California (see map following page). That is equal to a 340-year supply of energy. Says Irving Wender, a coal expert with the Federal Government: "Coal is our ace in the hole."

That ace will surely be played in coming years. The Arab embargo of 1973, and the subsequent quintupling of petroleum prices, drove home to the nation that it could no longer take for granted adequate supplies of reasonably priced energy. Top federal planners look on coal as a key way for the U.S. to escape the market manipulations of foreign oil producers. Besides being burnable in its familiar solid form, coal can be converted--though presently only with great difficulty and at high cost --into gasoline for cars, so-called synthetic natural gas for cooking and feedstocks for the chemical industry.

Bright Hope. Best of all, coal is still such a bargain that ships sail from as far away as Japan, France and Germany to buy the fuel, helping the U.S. balance of payments by $3.2 billion last year alone. The price of coal burned under boilers has more than doubled in the past three years, to $17.30 a ton; rarer metallurgical coal used in steelmaking brings up to $51. Even so, 81-c- worth of coal produces as much thermal energy as $2 worth of oil. Cleaning the coal to make it more acceptable would raise the price somewhat, concedes Carl Bagge, president of the National Coal Association. But, he says, "we've never had more hope as an industry."

After slumping through the 1950s and remaining mostly stagnant during the 1960s, coal production rose from 592 million tons in 1973 to 603 million tons in 1974. Last year it hit an alltime high of 640 million tons--surpassing the previous peak of 631 million tons in 1947.

The rise has brought a return of almost forgotten prosperity to some of the nation's remote poor towns. For example, in Beckley, W. Va. (pop. 14,000), brand-new Cadillacs line the streets, two new shopping centers have risen outside town and a resort community has opened in the rolling country beyond. And that may be just the start of the boom, which could extend to many other communities. President Ford has called for a doubling of coal output by 1985.

Old Veins. Can that ambitious goal be met? For all coal's advantages, the answer is far from certain. The industry can assemble the men, money and machines to do the job. It nonetheless faces severe problems of geography, technology, labor relations and, above all, ecology--how to burn more coal without unacceptably fouling the nation's air.

Though more than half of the nation's coal lies west of the Mississippi, the industry still concentrates heavily on working the old veins of Appalachia and the Midwest. They are still rich enough to support what has become an industry of corporate giants. Some 1,200 companies work small mines, but they account for only 40% of output. The other 60% comes from 15 companies, led by Peabody Coal of St. Louis and Consolidation Coal of Pittsburgh. Only three of the 15--Pittston (No. 5), North American (No. 10) and Westmoreland (No. 13)--are independent; the rest are subsidiaries of bigger companies. Six are controlled by oil companies; two are "captive" producers of metallurgical coal for U.S. Steel and Bethlehem.

The companies extract half of the coal by surface mining, using gigantic 20-story shovels that can crunch 120 cu. yds. of earth in one bite, exposing the coal veins for an army of other machines to attack. Mechanization has come to underground mines, too. In the big ones, miners no longer loosen the coal with explosives and pry it from the seam with pickaxes; they work continuous mining machines that cost $200,000 apiece and look like a cross between a chain saw and a lobster. The machines nose up to the coal vein and rip out ten tons of coal a minute; then their clawlike arms sweep the coal onto conveyor belts. The most efficient underground mines have "longwall" machines that continuously shear the coal vein, much as a delicatessen slicer cuts salami.

Yet productivity in the deep mines has dropped from a high of 15.6 tons daily per man in 1969 to 10.7 tons today. One reason: the Government's tough safety rules, which have cut mining efficiency. The industry has also been plagued in the past two years by hundreds of wildcat strikes. Coal executives say the stoppages prove that United Mine Workers President Arnold Miller is not as good a leader as he is a negotiator. In 1974 he won his union (current membership: 135,000) a healthy contract--the average wage is $50 a day before overtime--but he still cannot keep his men in line. Miller loyalists argue that the industry is to blame. "When the companies push hard for production," says one union man, "they wind up killing people." He means that the men have to strike to protect themselves against unsafe conditions. Whoever is right, the walkouts have largely stopped, at least temporarily; not only is Miller exercising firmer control, but the industry has also been suing U.M.W. locals for illegal strikes.

Boosting deep-mine productivity is only one problem. To open a new mine requires heavy capital expenses--on average, $35 in investment for each ton of annual capacity--that can be recouped only over many years. Says John Paul, a vice president of AMAX: "Coal mines are not water spigots. You don't just open a tap and turn them on." To justify the expense, coal men need a guaranteed market--and for that potential buyers have to have some assurance that the fuel can be burned in compliance with clean-air laws.

Giant Stacks. The trouble has been intensified by conflicting Government views of the national interest. President Ford puts primary emphasis on developing plentiful, inexpensive domestic energy to power the U.S. economy. Congress mainly stresses protection of the environment. Coal offers no easy compromise: it is extremely difficult to make both cheap and clean.

In 1970, when Congress passed amendments to the Clean Air Act, one of the provisions forbade the burning of fuels with a high sulfur content in the most populous parts of the country. Since at the time nearly 80% of U.S. coal production did not meet the standards, many electric utilities--coal's biggest steady customer--switched to oil. Industry efforts to get Congress to soften the law failed. Finally, in 1974, the Federal Energy Administration, seeking to save oil, ordered 25 utilities to switch back to coal in 74 plants. So far only one power plant has actually made that switch. Conversion of the rest has been blocked by the Environmental Protection Agency, which enforces the Clean Air Act.

Last year President Ford asked Congress to amend the act so that higher-sulfur coal could be legally burned. The Senate responded by writing a new bill that would actually tighten the standards further. Meanwhile, the coal and utility industries have embarked on several new ways to satisfy the law.

American Electric Power, a big utility holding company that also owns coal mines, has built tremendous smokestacks that tower 1,000 ft. over some of its power plants. When noxious sulfur dioxides are discharged at that altitude, the gases become so mixed with clean air that after they finally descend to the level at which people breathe, the sulfur is too diluted to be harmful. Sulfur can also be removed from coal smoke by special chemical catalysts called "scrubbers" before the smoke goes up the stack. Trouble is, the scrubbers are expensive--the Tennessee Valley Authority is spending $50 million installing them on one power plant--and the industry insists that they are unreliable. One possible reason for the utilities' attitude toward scrubbers: the power companies now can automatically pass along hikes in fuel costs to customers--but getting electric rates raised to reflect the cost of antipollution equipment takes much longer.

A more promising technique captures the sulfur as the coal is burning in a special furnace. Developed by Michael Pope, a New York consulting engineer, this "fluidized bed combustion" system will soon be tested by the federal Energy Research and Development Administration at a power plant in Rivesville, W. Va. Early experiments show that the new furnace not only causes coal to burn more efficiently, but also actually converts the sulfur into a useful soil enrichener.

Promised Land. Meanwhile, the mining companies' search for clean coal is leading to a vast new promised land --the West. The industry has long known about the immense coal reserves between Arizona and Montana. But few operators chose to mine the deposits, mainly because the coal was too far from the biggest markets. Yet after 1970, the Western coal began to exert a powerful new appeal for the simple reason that it has a low sulfur content.

The more the coal industry investigated the Western reserves, the more it liked what it found. Some of the coal lies in gigantic, 100-ft.-thick seams close to the surface. All a coal company must do is strip off the topsoil and gouge up the mineral. Mining cost per ton: a mere $3. Even after transportation costs to the East are figured in, the coal can compete in price with that of Appalachia.

As a result, the industry has drawn up exceedingly ambitious plans for developing the West. The Northern Great Plains alone is expected to produce 977 million tons annually by the end of this century. At that time, the region should have 64 mines exporting coal, 25 new coal-fired electric power plants and 41 plants to convert coal into natural gas. In the Four Corners area where Arizona, New Mexico, Utah and Colorado meet, another 14 generating stations are planned to burn coal from nearby mines. Four are already built, sending electricity by wire to consumers as distant as Los Angeles and El Paso--a cheaper and less polluting process than shipping the coal to be burned at power plants in metropolitan areas.

Right now, however, only 109 million tons of coal a year are being produced in the West--little more than a sixth of national output. One reason is that opening a surface mine takes between two and four years. Beyond that normal delay, four harder-to-solve difficulties--three of which again involve a clash between ecology and economy --have held back Western coal development. The four are:

STRIP-MINING. The coal industry in the past has been roundly condemned for strip-mining coal and then simply abandoning the ravaged land. Nowadays, the record is far better; by spending between $600 and $6,500 an acre, mining companies have restored some land in the Midwest and Pennsylvania so well that no one would suspect that the acreage had been stripped. In contrast with those areas, which are well watered, much of the West's coal lands get less than 10 inches of rainfall a year. Experts from the National Academy of Sciences doubt that fragile desert vegetation will regrow on such dry earth after it has been disturbed by mining, no matter how much money is spent.

Congress's answer has been to design a strip-mining law that sets stiff standards for reclamation of mined-out areas: if the land cannot be restored, it cannot be mined, period. President Ford has twice vetoed the bill, arguing that it would cut coal production, throw 36,000 people out of work and also raise the price of coal. In his eyes, each state should enact surface-mining laws to suit its own needs. Congress is unpersuaded, though, and will try to push the same measure through this year.

LAND RIGHTS. Many Western landowners--Cheyenne Indians, Montana ranchers, Dakota farmers--have been fighting the coal companies. The question for them is whether to allow their property to be torn up to harvest a onetime-only crop of coal if the land cannot be returned to its original use. Farmer Harold Oberlander of New England, N. Dak., had an experience that has been repeated many times elsewhere. When he came home from his 2,000 acres of wheatland one day last year, a coal-leasing agent offered him a down payment of $10,000 cash, plus royalties on the coal eventually to be mined, if he would sign on the dotted line. It could have been the easiest money Oberlander had ever seen, but he refused it. "We've got some of the best land in the world," he says. "It's a way of life. I want to be able to pass it on to my children. Once they strip the land, it will be scars for centuries to come."

LEASING TROUBLES. In 1971, the Sierra Club sued the Interior Department to force it to describe the environmental effects of mining in the Northern Great Plains. The environmentalists wanted to know how mining would affect water supplies, how the now sparsely populated region could absorb the expected horde of 516,000 residents and how the land could be returned to its original uses. As the case wound through the courts, Interior declared a moratorium on the leasing of public lands in the West. That denied mining companies much of the potential coal supply since it lies below federally owned soil.

Last January the U.S. Supreme Court agreed to hear the case, and Interior Secretary Thomas S. Kleppe announced that leasing of the land may be resumed by mid-1977--in an entirely new way. Instead of granting leases on the traditional first-come, first-served basis, Kleppe will accept competitive bids. Speculators will be discouraged by a requirement that winning bidders develop their land "diligently."

PIPELINES. To move the projected volumes of coal, railroad lines must buy thousands of new hopper cars and locomotives and upgrade roadbeds and tracks. Rather than wait, several consortiums of mining companies have come up with another idea: building pipelines to carry coal mixed with water from mines to users. The longest line under serious consideration would stretch 1,036 miles from Gillette, Wyo., to White Bluff, Ark. But the pipelines invariably would have to cross rail lines --and the railroads, anxious to carry all the Western coal, refuse to give their competitors permission to cross their land. The argument is before Congress, which is expected to pass a bill later this year granting the coal pipelines the right of eminent domain.

Assuming that coal wins the West, the next big question is whether it can win new customers for unconventional uses. The future looks bright indeed --provided that coal can be economically turned into synthetic oil and natural gas. So far several plants have been planned, all of them aimed to produce highly marketable (because scarce) natural gas. The largest demonstration plant to be built is a $237 million facility in New Athens, Ill. Jointly owned by Union Carbide and Chemical Construction Corp. and partially financed by ERDA, it has been designed to turn 2,700 tons of high-sulfur Illinois coal into 22 million cu. ft. of "syngas" and 3,000 bbl. of "synoil" each day.

In some ways, it is a key test. If the plant can produce gas at $3.20 per million cu. ft. when it starts operating in 1979, it will succeed in at least matching the economics of existing--and readily marketable--synthetic gases such as those made from naphtha. Becoming a feedstock for "syngas" would open a major new potential for coal, especially the now stymied high-sulfur varieties. The Federal Government would benefit, too, since the plant's success would be an early vindication of its insistence that the nation can achieve relative energy independence.

Yet too much can be made of the project. It is only the first of a number of technological quests for new uses for the nation's most abundant fuel. Eventually, one of them will surely pay off. When that will happen, no one now can guess. At that point, however, coal will clinch its title among fuels as the once and future king.

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